2020-2021 Sector Assessment (Adhesives & Bonding)

The adhesives sector, which produces adhesive products made from various chemicals that people need in industry and daily life, continues to grow year after year despite all challenging conditions. [caption id="attachment_124184" align="alignleft"] Adil Pelister Chairman İKMİB (Istanbul Chemical Substances and Products Exporters Association)[/caption] Today, one or more types of adhesive are used in every product, from small packaging to diapers and even automobiles. Despite the pandemic, the adhesives and glues sector grew more than 6% in exports in 2020, achieving USD 193.3 million in exports that year. The sector's exports are expected to increase by at least 2% in 2021. The 2023 export target is projected at USD 232 million. On the other hand, the sector is dependent on imports in terms of raw material procurement. Significant domestic investments were made in the sector in 2020. For 2021, we anticipate that investments will continue depending on reform regulations to be implemented by our government, improvement of the investment climate, and prioritization of investments in the chemical sector. In particular, currency exchange rate volatility must be minimized to enable our companies to make value-added and long-term investments. Nevertheless, while improving the investment climate and ensuring predictability are important for value-added production and exports to occur, the productivity efficiency of our human capital in conducting business must also be increased. In financial reforms, particularly reducing interest rates on long-term credits related to investments is of great importance. Regarding the incentive system, we believe that revisions to the incentive system during investment, rather than post-investment incentives, will open doors for our chemical sector.        

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The Covid-19 pandemic has caused multidimensional change in the world economy and global trade, while continuing to threaten human life, which is our first priority. Of course, we are going through a difficult period for our country and the chemical sector. In the initial phase of the outbreak, there was uncertainty and inexperience. However, we subsequently managed to adapt rapidly to the process. As BETA Kimya, despite all the negative effects of the pandemic, we continued working towards our 2020 targets.   [caption id="attachment_124185" align="alignleft"] Cihat Sayacı General Manager BETA Kimya[/caption] During the outbreak period, we developed and launched our Mitreapel Hunter Antibacterial Disinfectant products in a very short span of just one month. This step was also very important for our sector. Subsequently, in July we laid the foundation for our BETA Kimya GEBKİM Campus investment. With an investment value of TRY 315 million, we made a bold start with our own equity. Because production is in our genes. Throughout the year, we introduced more than 20 new products to our customers. While maintaining and expanding our position in the domestic market, we added 10 new countries to our export portfolio. As of February 2021, we are exporting to 78 countries across 5 continents. Along with all these initiatives, we completed 2020 with 30% growth. Currently, we continue our operations with more than 150 products in 9 categories ranging from furniture to construction, automotive to textiles.                

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Following a good first quarter in 2020, the pandemic's impact caused significant contraction in April and May, which gave way to recovery starting in June, followed by growth. Delayed and pending work, along with activity in the housing sector, became the main driver of growth. Particularly due to infrastructure projects, the ready-mix concrete sector grew, and the cement sector grew due to exports. Naturally, the building chemicals sector was also positively affected. In this regard, both as Sika and as a sector, it is possible to speak of double-digit average growth rates exceeding the previous year. [caption id="attachment_124193" align="alignleft"] Turgay Özkun General Manager Sika Building Chemicals[/caption] Particularly with the substantial impact of the second wave, I expect the first quarter of 2021 to be challenging. Additionally, unexpected increases in raw material prices imported by building chemicals and supply difficulties may again cause problems in the first quarter. If the issues mentioned are resolved, a return to growth trend starting from the second quarter can be expected. Market disruptions in liquidity that may occur will negatively affect companies with weak financial structures. Despite everything, as a country, the construction sector still has significant potential. It is expected to show growth with the right steps. As Sika, we classify our strategy, built on profitable growth and sound financial structure, into three main categories: sustainability, innovation, and market penetration. I wish a prosperous year for our country and our sector.